Credit card spends dip 11.6% in November after record show in October

November spends are still higher than pre-Covid levels, with 43% YoY growth

Credit card spends, which had hit a record high in October, dipped 11.6 per cent in November on a month-on-month (MoM) basis. However, the spends rose by 43 per cent on a year-on year (YoY) basis, thanks to recovery in economic activity and a rise in the share of e-commerce transactions.

In November, credit card spends totaled Rs 89,492.69 crore (value of transactions at PoS and ATMs), compared with Rs 101,228.64 crore in October. This was the first time such spends touched the Rs 1-trillion mark, registering a 25 per cent MoM growth, despite a high base.

Experts had already cautioned that while the trend of high spends would sustain, it might not top the Rs 1-trillion mark in November, since the record figures came on the back of festival-season spending. However, credit card spends in November are still higher than in September, August, and July.

Credit card spends have been on a rise, particularly since July after the second wave of the pandemic receded, and have been even higher than the pre-pandemic levels. In January and February of 2020, credit card spends were Rs 67,402.25 crore and Rs 62,902.93 crore, respectively. Credit card spends since July 2021 have been over Rs 75,000 crore consistently.

HDFC Bank reported spends to the tune of Rs 23,059.1 core in November, followed by ICICI Bank with Rs 17,869.48 crore, SBI Cards with Rs 17,752.65 crore, and Axis Bank with Rs 7,317.63 crore. According to a report by Motilal Oswal, “Monthly spends per card for the industry moderated to Rs 13,200, still higher than the average of Rs 11,000 over the past one year (higher than pre-Covid levels)”.

“The recovery in economic activity and rising share of e-commerce transactions have enabled spends to witness a strong recovery. Increased economic activity would keep the momentum in spends buoyant”, said Nitin Aggarwal, the vice-president, research-banking sector, institutional equities, Motilal Oswal Financial Services, in the report.

“The overall demand in consumer credit has recovered following the dip on account of the second wave. The upturn is led by demand for personal loan and credit card segments while demand from other product categories show signs of stabilization”, the RBI said in its bi-annual Financial Stability Report.

Meanwhile, new credit card additions by the banking system topped the 1 million mark for the third consecutive month in November, taking the total credit cards in the market to 67.58 million. In November, 1.22 million credit cards were added, 9 per cent lower on a MoM basis, 1.33 million new credit cards were added in October, and 1.09 million in September.

HDFC Bank, the largest credit card issuer in the country, led in new credit card additions with 302,101 cards, followed by SBI Cards with 204,499 cards, Axis Bank with 171,893 cards, and ICICI Bank with 155,539 cards. HDFC Bank has come back aggressively to issuing new cards after the Reserve Bank of India (RBI) lifted the embargo on it in August. In fact, the spike in credit card additions can be partially attributed to the aggressive play by HDFC Bank.

Having said that, ICICI Bank has added the most cards in the past 12 months — 2.41 million cards. SBI Cards has added more than 1.67 million cards in the same period and Axis Bank has added a little over 1 million cards. HDFC Bank’s outstanding credit cards, on the other hand, has increased by 160,683 during the same period.